Monday, August 25, 2008

Strife as Economic Incentive

Once again I find myself turning to SPIEGEL ONLINE for a timely extended discussion of a complex global problem. The problem in this case (given that there are so many these days) is the current standoff between Georgia and Russia and the question of whether or not the Cold War is "heating up" again, "a proposition devoutly to be wished" by many strident American (Republican?) voices. However, I am less interested in the skillful analytical work that Ralf Beste, Susanne Koelbl and Dirk Kurbjuweit have applied to all of this complexity. Rather, I want to call attention to one paragraph, which is actually highly incidental to their analysis, that calls attention to a piece of context that probably should not be ignored:

Currently, the entire world is sending its emissaries to the Caucasus, transforming Tbilisi into the global capital of international politics. Over the past two weeks, prices at the five-star hotels of Tbilisi have soared, and yet these luxury establishments are still nearly fully booked.

At a time when it seems as if the entire world is suffering an economic crisis (much of which, unfortunately, can be traced back to greed-based poor decisions originating in the United States), here is an (albeit small) economic sector that is doing well: the hotel sector of the travel business (and probably at least one small set of airline routes). This has less to do with whether or not the beneficiary is in the luxury sector than it has to do with the role of crisis as economic stimulus. I am a product of history teachers who believed that it was the Second World War, rather than the New Deal, that pulled the United States out of the Great Depression, basically because the War created an unprecedented demand for manufacturing that revived our key industrial operations in a way that the New Deal never could. However, are we to conclude that war (or at least the threat of war, which is, for all intents and purposes, what the Cold War was) is the only effective way to stimulate a deeply depressed economy?

One answer may be to consider an economic system as if it were a metabolic system, somewhat in the spirit of the approach that James Grier Miller took in his book, Living Systems. (Miller actually viewed "The Society" as a living system in Chapter 11 of his book and addressed economics in terms of regulating production within that system.) Thus, if stress "is an unavoidable effect of living" (as is stated in the Britannica Online Encyclopedia) to which the body responds "with a combination of psychic and physiological defenses," then economic systems, if they are to survive, must have their own "defenses," which have more to do with (not necessarily rational) agent behavior than with psychology or physiology. Put another way, the worst thing that can happen to an economy is that it achieves a state of equilibrium, because, in the spirit of Isaiah Berlin's approach to the history of ideas, that "state," by its very name, is fundamentally static; and the only time a "living system" achieves stasis is in death! Thus, it is the forces that "stress" an economy (such as social crisis) that ultimately keep the economy "alive" and functioning in the best interests of all, rather than languishing in a condition of depression, which, while not strictly static, is not particularly dynamic.

Berlin's arguments against stasis grew out of his critical analysis of utopianism and his conclusion that any utopia must necessarily be static. Thus, if stress keeps the body going (as long as it is at a level that can be managed by the body's copying skills), then social crisis may, indeed, be the most effective economic stimulus. The only problem with this theory is that, in the wrong hands, it may be applied as an excuse for inducing crisis as an economic solution. Sadly, this may explain the motives behind Tom Hayden's analysis of the current Georgian crisis as a product of neoconservative thinking trying, once again, to gain the upper hand. Having bankrupted the American economy with excessive an ineffective spending in the name of the "War on Terror," the agents responsible for this folly would now attempt damage control by seeking economic incentives through a revival of the Cold War. Once again we seem to be experiencing an attempt to repeat history without, as I have previously called it, "any Marxian overtones of farce" (unless one has a really sick sense of farce)!

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